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Skills crunch looms again as mining firms vie for talent

TORONTO (miningweekly.com) – The shortage of skilled people – a top concern for mining companies during the boom years leading up to mid-2008 – is once again bubbling up as a major issue facing the sector.

Industry insiders say the severity of the situation is probably near to, or even as severe as it was before the economic downturn, but this time there is little prospect of a cooling off, which is what happened from late 2008 when projects were shelved, higher-cost mines closed and thousands were laid off.

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Record prices for many commodities, coupled with cheap and more easily available finance, mean that activity in the mining sector is roaring and skilled mining engineers, geologists, technicians and other key people are again hot commodities and companies are having to pay up to get hold of them.

"It is a problem," Goldcorp CEO Chuck Jeannes said. "That's based on our experience at Goldcorp, as well as conversations with others."

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Jeannes said he doesn't see the shortage becoming a constraint on projects moving forward.

"But it will just add to the cost. People are available, but because of the high demand versus supply, the cost of attracting and retaining the skilled professionals is going up."

A good way to judge the market is by looking at the availability of people for capital projects, said Barrick Gold human resources VP Chad Hiley.

Barrick, the top producer of the yellow metal, also considers the conditions in Perth, in Western Australia, a “leading indicator” for labour trends in the mining sector globally, he said in an interview.

“And what we are seeing certainly in those two markets is that the competition for talent for technical professionals – mine engineers, metallurgists, maintenance professionals and geologists – is returning to 2008 levels,” he said.

Western Australia alone will require an extra 33 000 workers in its mining sector by the end of 2012, the state's Chamber of Minerals and Energy CEO Reg Howard-Smith said last month.

TWO YEARS OLDER

And Canada's Mining Industry Human Resources Council estimates that the country will need around 100 000 new workers between 2011 and 2020, just based on conservative growth forecasts. said executive director Ryan Montpellier.

If the numbers are run at the growth levels experienced over the last 18 months or so, the estimate jumps to 140 000 new people, he said in an interview.

“The industry clearly continues to face a very significant skills shortage. It's just staggering when you look at the numbers and you consider that it takes two to five years to train a skilled worker.”

There is also the problem of an ageing skilled workforce in the sector, Montpellier commented.

“Obviously we had the recession in the last few years, but the other thing that happened is that everyone in the industry is now two years older.”

Companies reduced their workforces and new entrants into the mining sector followed metals prices downwards during the 1990s, resulting in something of a missing generation for the industry.

For professional geologists, for example, there is a clear deficit between the newly-trained entrants to the industry and the older generation that is heading towards retirement, commented Scott Jobin-Bevans, the president of the Prospectors and Developers Association of Canada.

“It's very difficult to get trained geologists in the 30 to 45 age group, and that just transfers to experience,” he told Mining Weekly Online.

“In my view it's even busier, the challenges are greater in getting services as well as people, than they were at the height in 2007, 2008,” Jobin-Bevans said.

“It's worldwide and it's a tough one to solve. It's good for the people in it, obviously. It's nice to see geologists as price setters rather than price takers, but it's a real challenge.”

TIMELINES

The mining industry is already struggling to meet its production targets and project timelines, especially in base metals like copper and nickel, and the difficulty in finding skilled people may exacerbate the situation.

"It's not just the availability of labour at the mining companies themselves, but also the consultants and suppliers are also stretched," Stifel Nicolaus analyst George Topping said in an interview.

"So you're seeing a shift in timelines, you really have to allow an extra 20% on your timeframe to take into account of available skills."

The high demand for skilled workers also translates into productivity issues, Topping commented.

Workers realise they can easily walk away and find a position elsewhere, which means there is less pressure to perform, he said.

"So the companies are paying more for less."

BRAND NEW IN SCHOOL

Mining engineering graduates are being scooped up quickly and the number of companies looking to recruit new graduates has also increased this year, said Colorado School of Mines career center director Jean Manning-Clark.

The university, in Golden, Colorado, tracks all the offers received and positions accepted by its students, and is sitting at a 100% outcome for mining undergraduates in the current year, which means that they have all either taken jobs in the industry or gone on to further studies.

“Even for our internships, all of our mining engineering students had summer internships this year,” Manning-Clark said.

Freshmen, or first-years, are finding themselves with multiple offers for internships, she said. “And this is someone brand new in school. It's great to see.”

“It's a standard supply and demand question,” commented Barrick's Hiley. “We are seeing salaries become more robust, although I wouldn't make that generalisation across the world,” he said.

Mining firms, including Vancouver-based Teck Resources, have also turned to social media in the hunt for new talent, advertising positions through a corporate Twitter feed.

Agnico-Eagle Mines, a Toronto-based gold-miner with assets in Canada, Mexico and Finland, also uses social media for recruiting, and is looking beyond its traditional areas, in terms of geography, as well as trying to attract skilled people like engineers from other industrial sectors, spokesperson Dale Coffin said in an interview.

In general, mining companies are often actively poaching skilled people from each other, and there is “intense competition” for new graduates, Montpellier commented.

“We will see significantly more pronounced shortages and a tighter labour market over the coming years; there is no way around it,” he said.

“There will be pressure on wages and companies will essentially have to do more with less. Productivity will have to increase and they won't be able to just throw more people at it.”

It can be difficult for junior companies who train workers, including local people in the countries where they operate, only to see them scooped up by deeper-pocketed majors, Mindoro Resources VP Penny Gould said in an interview.

“It's a challenge. We just can't match some of the salaries that those majors are paying.”

Mindoro, which has nickel, copper and gold projects in the Philippines, has managed to lessen the problem by offering strong job security to employees, even during more difficult times for the industry, she said.

One of the ways other junior companies are getting around the shortage is by teaming up with mid-tiers or majors, who take a minority stake or sign an earn-in agreement on specific projects, and then assist with technical and other advice.

This doesn't only apply to Western companies, as Asian groups looking to acquire resources or offtake agreements will also often include technical cooperation in agreements with exploration companies.

DEARTH OF DRILLERS

Drilling services are also in high demand, as mid-tier and major miners push to find and expand mineral resources, and with financing more available to junior firms.

There is increasing pressure on the supply of skilled rig operators, especially in Australia and Canada, where exploration activity has accelerated the fastest, Foraco International CEO Daniel Simoncini said in a May 20 interview.

The shortage has already reached a point where drilling activity in both countries is being constrained by labour availability, he said. Other areas like Latin America are not seeing as much tightness, “but generally there is a shortage”.

The increased activity also means that the waits for drilling results to come back from laboratories are getting longer again, Mindoro's Gould commented.